The short answer is, “not necessarily.”
Many people die without having designated in a will who should take their property, but so-called will-substitutes frequently do the work of a will.
The most common will-substitutes are funded trusts, joint tenancies, tenancies by the entirety, and various kinds of pay-on-death or transfer-on-death accounts, contracts, and deeds.
For example, if a married couple owns a house together and the deed is held in “joint tenancy”, at the death of one spouse or “joint tenant”, that person’s interest in the house automatically becomes the property of the surviving spouse or “joint tenant”. Similarly, when the owner of a pay-on-death account dies, that account is payable to the person designated by the decedent (person who died) when setting up or modifying the account.
Unfortunately, some people confuse joint tenancies with tenancies in common, and many fail to keep all their pay-on-death designations (or designated beneficiaries) current. This can result in property passing to the wrong person. Someone like an ex-spouse could end up being entitled to receive the decedent’s employer-provided life insurance, even if there is strong evidence that the decedent did not want that to happen.
A decedent’s property that does not pass by will or by will-substitute passes instead in accordance with the state law in which the person lived. Think of these laws as a standardized back-up will written by the state legislature on behalf of everyone who dies intestate, that is, without a will.
Despite the legislature’s good intentions, property controlled by intestate rules sometimes passes to people the decedent would never have selected. For example, any such property passing to the decedent’s children will be shared by them equally, even if the decedent had made clear (but not in a valid will) that he did not want a particular child to get anything … and even if that child had once talked the parent into giving that child “his inheritance” before the parent died. That child would probably end up with a double share!
It is also possible that nothing would pass to someone the decedent considered his or her child. Consider this hypothetical fact pattern: Mrs. Client’s first husband dies young, leaving Mrs. Client with two very young children. Eventually Mrs. Client meets and marries Mr. Client, and he raises Mrs. Client’s children as though they are his own. Eventually Mrs. Client dies, leaving all her property to Mr. Client expecting that he will eventually leave everything to Mrs. Client’s children. But if Mr. Client dies without leaving a will or any will-substitutes, none of his property—not even the property he received from Mrs. Client!—will pass to Mrs. Client’s children. This is because they are his stepchildren, not children.
If Mr. Client in the above hypothetical is not survived by at least one grandparent or a grandparent’s descendant, his entire estate—including the property received from Mrs. Client—will pass to the State. Mrs. Client’s children will take nothing. In some states Mr. Client’s property would pass to his stepchildren rather than to the State, but not in Hawaii.
Even in Hawaii, where the hanai custom is deeply rooted, the law treats a hanai child like a stranger to the hanai parent. So unless a hanai parent has a properly drafted will or will substitute in place, none of the parent’s property will pass to the hanai child at the parent’s death. Even strong evidence of a different intent will not change this result, unless there is a valid will or will substitute.
As always, I must add that this post does not contain legal advice, and that you should not rely on any of the above information to determine what is in your own best interest.
John Roth is the founder of Hawaii Trust & Estate Counsel, a statewide estate planning law firm with offices in Kamuela, Hilo, Kona, and Honolulu. He has taught Estate Planning at the Richardson School of Law, and business law courses at the University of Hawaii—Hilo. He has resided in North Hawaii since 2008.
NEXT QUESTION (OUT 7/1):
Next month’s post will address goals that can sometimes be accomplished only with a will, and other goals that only a will substitute can be used to accomplish.
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